Financial Terms and Definitions Essay

1. FinanceFinance is the study of how people and businesses evaluate investments and raise capital to storage them.2. Efficient marketEfficient market is the concept that all trading opportunities are fairly priced.3. Primary marketPrimary market is a power of the financial market where new auspices issues are initially bought and sold.4. Secondary marketSecondary market is the financial market where previously issued securities such as stocks and bonds are bought and sold.5. RiskRisk is the potential that a chosen action or activity (including the choice of inaction) will lead to a loss (an unsuitable outcome).6. SecuritySecurity is a negotiable instrument that represents a financial claim that has value. Securities are broadly classified as debt securities (bonds) and equity securities (shares of common stock).7. takeStock is an instrument that signifies an ownership position in a corporation.8. BondBond is a long-term (10-year or more) promissory note issued by a borrower,pr omising to pay the owner of the security a predetermined amount of interest each year.9. CapitalCapital is the amount of cash and other assets have by a business. These business assets include accounts receivable, equipment, and land/buildings of the business. Capital can also represent the accumulated wealth of a business, represented by its assets little liabilities.10. DebtDebt is money that has been borrowed and must be repaid. This includes such things as bank loans and bonds.11. YieldYield is the income return on an investment. This refers to the interest or dividends received from a security and is usually expressed annually as a percentage based on the investments cost, its current marketvalue or its governance value.12. Rate of returnThe gain or loss on an investment over a specified period, expressed as a percentage increment over the initial investment cost. Gains on investments are considered to be any income received from the security plus realized capital gains.13. Return on investmentA performance measure used to evaluate the efficiency of an investment or to compare the efficiency of a number of different investments. To calculate ROI, the reach (return) of an investment is divided by the cost of the investment the impression is expressed as a percentage or a ratio.14. immediate payment flowCash flow is a revenue or expense stream that changes a cash account over a given period. Cash inflows usually swot up from one of three activities financing, operations or investing although this also occurs as a result of donations or gifts in the case of personal finance. Cash outflows result from expenses or investments. This holds true for both business and personal finance